Last week I provided initial observations on the acquisition of i2 Technologies by JDA Software Group. In that post I reflected on yet another brand name departing the supply chain technology landscape, and my counsel to existing i2 customers to be cautious, and do your homework.
Since that time, others have provided commentary, to include Dan Gilmore’s End of Supply Chain Era commentary within Supply Chain Digest. Influential industry analyst firms AMR Research, IDC Manufacturing Insights and Gartner have all initially weighed-in on the acquisition, and I would urge readers to especially take note of the combined AMR Research commentary (available to non-clients for a limited time) as well as the August 18th edition of Manufacturing-Insights Theory and Practice newsletter..
(Note of full disclosure- I was previously a contributor to both of these firms).
The consensus view seems to fall around the following observations:
– This acquisition represents the end of an era for both the original innovators and noted icons in the supply chain planning arena, both i2 and former Manugistics.
– Dan Gilmore cited the fact that an industry analyst had written that “When i2 goes off the cliff, there won’t be any skid marks”. That quote actually came from my former mentor and manager at AMR Research, Larry Lapide, who insightfully observed back in 2000-2001 that while i2 was articulating the real needs for advanced supply chain planning and collaboration, the overall pace of the company was beyond its ability to ground users in the reality of the complexity of the overall process change and technology capability at that time. A lot of course has changed since that time. Supply chain technology best-of-breed as well as ERP providers are much more grounded today in the capabilities of the technology.
– AMR Research observes that the model of a consolidator such as JDA Software typically leads to lower levels of product innovation in favor of recurring rates of maintenance revenues, but cautions users to wait and make their own individual assessments. Bob Parker of IDC concludes – “There is some hope that the consolidation of one time market leaders, Manugistics and i2, will provide a viable alternative to the SAP/Oracle duopoly, but JDA will have to show a conviction to spending development dollars to maintain functional advantages, and marketing dollars to stretch beyond its retail comfort zone”. Keep in mind that industry analyst firms have the both technology firms as clients, as well as end users, so they have to walk a fine line in their published recommendations. It is therefore best to conduct your own individual assessment or speak with a seasoned industry observer.
– Most all of the commentary and conversations that I have since this announcement has further pointed to the fact that i2’s model of shifting more towards a custom supply chain software development and services provider is a more important concern for what remains of existing i2 customers.
– AMR Research’s Bruce Richardson commentary in this week’s First Monday newsletter (sign-up required) raises a broader set of observations as to whether this event presents a new opportunity for custom supply chain software integration firms, especially the India-based firms- Bruce comments- “While employee retention is a concern in every acquisition, it may be a very real concern in terms of keeping the account teams for the Top 30 customers (at i2 Technologies). I’ve spoken at enough i2 events to understand the volatility and mood swings of its largest accounts. It’s not hard to imagine a customer approaching one of the large Indian services firms and suggesting it takes over the i2 work. This could result in a minor bidding war for development and account management talent.
The bottom line for readers and users of supply chain technology is to continue to demand continuous innovation and responsive product support from your existing or future supply chain technology or services provider. There are good examples of technology vendors who can both acquire and continue to add to product innovation. An example would be Oracle Corporation, with their previous acquisitions of Demantra or G-Log.
Managing global supply chain processes is as complex as ever, and demands even more quality and responsiveness from the community of technology providers. Manufacturers need to continue to do their homework and be diligent. Supply chain technology providers need to first and foremost seize the moment and communicate their ongoing value to enabling supply chain process and information integration needs, while also fulfilling the financial business model.